Financial Markets and Institutions (2-downloads)

5. The financial system is among the most heavily regulated sectors

of the economy.

The financial system is heavily regulated in the United

States and all other developed countries. Governments regulate financial mar-

kets primarily to promote the provision of information, and to ensure the

soundness (stability) of the financial system. Why are financial markets so

extensively regulated throughout the world?

6. Only large, well-established corporations have easy access to 

securities markets to finance their activities.

Individuals and smaller

businesses that are not well established are less likely to raise funds by issu-

ing marketable securities. Instead, they most often obtain their financing from

banks. Why do only large, well-known corporations find it easier to raise funds

in securities markets?